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Follow-up of PM’s visit to China: Secretaries’ Beijing meeting fails to fetch required dividends.

The background interviews conclude that the response from China is not as per expectations as it has refused to extend unilateral concessions on 313 tariff line which Pakistan had demanded. China said that Pakistan has already failed to exploit the potential to increase its exports on the tariff lines on which it has already extended zero duty. Chinese authorities have identified that Pakistan needs to increase its export surplus and for this purpose they (Chinese authorities) are ready to provide technology to Pakistan’s entrepreneurs.

By Khalid Mustafa
November 16, 2018

ISLAMABAD: The crucial meeting of Pakistan’s top secretaries with their Chinese counterparts held on November 9 and which lasted for four days in Beijing as a follow-up to the visit of Prime Minister Imran Khan has failed to fetch the required dividends as was being expected.

The secretaries of commerce, finance, foreign affairs and governor State Bank of Pakistan are tight lipped after their return from Beijing.

Secretary commerce and secretary foreign affairs stayed there after 3-day PM Imran Khan’s visit that ended on November 5. However, secretary finance and governor State Bank of Pakistan were sent there to finalise to the modalities of the package from China for support of balance of payment and for further inroads to China’s market through seeking the unilateral concession on 313 tariff lines.

The back ground interviews of the top mandarins of commerce and finance division suggest that China has refused to extend help as was offered by Saudi Arabia, but Chinese authorities vowed to work out a plan on long term basis helping Pakistan stand on its feet. This has not only put the PTI government on tight rope, but also forced the financial managers of the government to seek from three years IMF package with maximum credit line up to $10-12 billion.

Noor Ahmad, spokesman of Finance says Pakistan wants to have maximum loan from IMF as Funds loan is too much cheaper. He said that ongoing talks with Fund officials are expected to culminate by 21-22 November. However, he didn’t offer any comment on the outcome of November 9 Beijing meeting. However, official sources on condition of anonymity said that the four-day interaction with the Chinese high-ups remained fruitful.

However, the background interviews conclude that the response from China is not as per expectations as it has refused to extend unilateral concessions on 313 tariff line which Pakistan had demanded. China said that Pakistan has already failed to exploit the potential to increase its exports on the tariff lines on which it has already extended zero duty. Chinese authorities have identified that Pakistan needs to increase its export surplus and for this purpose they (Chinese authorities) are ready to provide technology to Pakistan’s entrepreneurs.

However, China reiterates that it wants to double its imports from Pakistan in the ongoing financial year and once Pakistan exporters achieve the goal, then China will triple its imports.

On the issue of balance of payment crisis, China that in the past has been extending the loans for strengthening reserves of Pakistan has now asked Pakistani authorities to work out a long term plan to make the country on its feet. China may extend $2 billion loan for Pakistan reserves under short terms strategy, but out of $2 billion, the amount of Yuan (RMB) will also be part of it for trade in RMB-Pak Rupee. And to this effect, government to government level interaction is still underway.

Finance Minister Asad Umar before the outcome of the follow up meeting held in Beijing, had said the balance of payment issue is no more as it has been resolved. Mr Umar had also hinted that the government will seek $6-7 billion from IMF, but now the situation is, otherwise, after China response.

Under the latest scenarios, the PTI government has now decided to seek maximum loan package apparently on the argument that the Fund loan is very y cheap, but the officials said that Chinese response has compelled the authorities to seek maximum credit lines of $10-12 billion.

Since the response from China which is not up to the mark, so the government feels that it will provide opportunity to US which is the most influential member of IMF to influence the Fund management more to impose strict restrictions on Pakistan against the loan programme.

Preempting the US influence, the background interaction with top officials said, Pakistan has already approached EU which is also member of the IMF seeking its help for achieving the IMF loan on soft terms.